How much does bespoke software cost?

We understand that bringing a software project to life is no trivial matter. It involves extensive planning and a real understanding of the problem to be solved. After all, there’s a risk of wasting resources on something the market doesn’t need or failing to address the actual pain points within the company.

That’s why we’ve outlined some key points we’ve identified as crucial for building 100% bespoke software. All based on our experience, with over 100 projects completed and more than 50,000 hours of coding.

To make it easier for you to digest, we’ve structured this article as follows:

1. Understand the stage of your business or project

2. Understand the hiring models

3. Project estimates

4. Features to be developed vs. investment value

5. Company models vs. variations in price, quality, and delivery

Understand the stage of your business or project

Before discussing prices and project scopes, it’s crucial to grasp the current stage of your business.

This is emphasized because bespoke software entails a much more significant investment value compared to off-the-shelf market solutions, typically procured through a monthly subscription.

Take, for instance, a CRM software (Customer Relationship Management), where on one end, you have systems like Pipedrive, ranging from £30.00 to £120.00 per user per month, offering immediate usability.

On the other hand, you may opt for a highly personalized solution tailored to specific processes, with development costs ranging from £250,000 to £800,000, depending on the complexity of your project.

Pipedrive is cost-effective because it aims to serve a large volume of clients with a 0% customized solution. Conversely, bespoke software targets a single client, as often the development company signs an intellectual property agreement with the client who commissioned the solution (as is the case with Ubistart).

Hence, it’s essential to determine whether bespoke software is indispensable for your business/project or if utilizing an existing off-the-shelf market solution is viable. Here, we illustrate two primary situations where one might seek a software factory to develop a customized project:

DIGITAL TRANSFORMATION

In this context, we find companies seeking to enhance operational processes that, until now, have been manual and impeding rapid business growth or suffering from a high rate of human error. Customized software can aid in digitizing areas of the company, automating manual processes, and providing business intelligence through BI (Business Intelligence) and Big Data.

Therefore, it’s crucial to estimate the operational cost of the company in the area requiring digitalization with software and calculate if the solution will yield returns within a 1 to 3-year horizon, assisting the company in its growth trajectory.

DIGITAL STRATEGY

This category encompasses companies aiming to establish new customer relationship channels and utilize software as a sales support tool (applications, e-commerce platforms, and portals). It also includes new ventures where bespoke software serves as the key factor for sales (applications like Uber, iFood, Netflix, etc.).

In this model, it’s crucial to understand the potential of the opportunity and simulate sales scenarios to gauge the return that could be achieved with the solution.

Regardless of the two possibilities, understanding your current situation is paramount!

Determine the stage your company or project is in and then assess whether an off-the-shelf software could meet your needs or if indeed you require a 100% bespoke solution.

In some cases, the first step towards implementing a customized system involves aligning your processes, which can be achieved using market solutions like SharePoint or Power BI (tools for process automation and business intelligence reporting).

Once off-the-shelf software no longer meets your business needs or you realize your opportunity is unique and there’s nothing in the market to address it, a bespoke model becomes essential for the continuity and scalability of your business.

Ponder on this! Is your company one where customized software development is fundamental? Will developing a bespoke solution yield a higher return on investment (ROI)? If so, in the short, medium, or long term, or perhaps never?

The decision to contract bespoke software is a strategic one, and it’s essential to assess if there’s a tangible return and what the timeframe for it might be.

Understand the contracting models

When considering hiring a company or freelancer to develop bespoke software, we essentially have two choices: paying for a fixed-scope project or an open-scope project.

In a fixed-scope arrangement, you’ll receive a total investment proposal from the company/professional for the solution. Whereas in an open-scope arrangement, the company/professional provides you with the cost per hour/week/month, and you pay for the consumption of these hours without a predetermined completion time.

The fixed-scope model provides more security for the client, but it also entails greater rigidity regarding the solution’s scope, with limited flexibility for changes during development. On the other hand, the open-scope model offers more speed while allowing adjustments during the development process.

However, which model is better? The answer to this question is: it depends on your situation. If you have a limited budget and need to understand the total investment before making a decision, the fixed-scope option is the best choice.

However, if you require speed in delivery, your solution isn’t yet fully defined, and your business can sustain a monthly team cost, the open-scope model is a better fit.

If you want to learn more about the differences between the two models, you can check out articles on our blog:

Estimating the scope

If you’ve decided to proceed with a fixed-scope project, it’s important to define how this will be developed. Remember when we mentioned earlier about understanding your current situation? Well, in this model, a well-defined scope is crucial!

The definition of scope can make a software project range from 30,000 reais to 2 million reais for larger demands. Therefore, reaching a high investment software doesn’t require much effort.

In reality, the greatest effort lies in understanding what is truly necessary for your digital solution to achieve the desired results with the leanest investment possible.

In this regard, we frequently encounter traditional companies in the market and startups looking to conquer the world with their ideas. And we don’t judge them for it because, after all, they want to deliver the best to their customers.

The Ubistart Methodology

Therefore, at Ubistart, we have a methodology we call Planning to deepen our understanding of our clients’ needs. This methodology typically lasts for 30 to 90 days (depending on the project’s complexity).

During this process, we involve a multidisciplinary team consisting of experts in design, innovation, business, and technology, including a Business Analyst, a UX/UI Designer, and a Software Architect.

By the end of this period, we present a comprehensive and mature report that leaves our clients comfortable to proceed to the software construction phase. In this report, we provide risk management, project assumptions, required technologies, team composition, scope of work, schedule, and budget.

In other words, only after the Planning phase does our client have a clear understanding of the investment and timeframe for the software project (whether it’s an app, portal/marketplace, or web system). We believe that thorough planning and understanding of the challenge prevent major frustrations during development, as well as significant financial losses for our client, because they know exactly what they are contracting.

In summary, creating highly robust solutions with multiple user profiles can introduce significant complexity, often exceeding the investment reality of the company or entrepreneur.

Take Uber as an example, which caters to both drivers and users, requiring two separate applications for each profile, in addition to an administrative profile, which is Uber itself.

Using this example, one should always question whether they aim to develop a project akin to Uber in its early stages or its current state. Whether it’s Uber or other apps like iFood, it’s essential to understand that these companies have already invested millions in software to reach their current stage.

Therefore, reflect on your company’s current situation. If you’re launching a digital platform and seeking to gauge its potential, structure a ~~Minimum Viable Product (MVP)~~. What is the minimum you can deliver without compromising the value proposition for your potential customer, whether internal or external?

Functionality Development vs. Investment Value

At this stage, you’ve determined your business’s phase and the scope you want to build. Now, you can estimate your solution.

To help you understand investment estimates for bespoke software, we’ll provide some examples below that could facilitate comprehension of investment when hiring a software company.

MVP for a startup, with an investment of £30,000 ~ £120,000

Imagine you want to collect information from potential clients through a form and create a basic logic to provide specific results for them. For instance, a calculation for the investment in building a custom house.

Another example could be an app that calculates the best investments for users in the stock market. It could also automate spreadsheet filling and results or even create a dating app with minimal features.

More features, with an investment of £120,000 ~ £240,000

In this investment range, you’ll find slightly more robust applications still resembling MVPs and without significant complexities. Simple marketplaces, apps with interactions, and early-stage systems for market validation can fit into this budget. However, applications resembling Uber, iFood, and other marketplaces are not included here.

Solutions with an investment of £240,000 ~ £400,000

Typically, those fitting in this investment range require complex solutions with validated models. For example, a simpler version of an Uber-like app, AIRBNB, or iFood.

Reworking a well-established web system or platform in the market falls into this category. Or even considering the automation of a manufacturing process integrated with other areas (e.g., the commercial sector).

Processes previously managed manually through Excel spreadsheets and now transitioning to a web system integrated with the company’s primary ERP (Enterprise Resource Planning).

Solutions exceeding £400,000

This category is for highly established companies in the market with significant investment capital. The solutions here aim to automate complex processes or revamp relatively large solutions, such as a marketplace.

In this model, we recommend only the open-scope approach, as providing a fixed estimate would be too complex and time-consuming due to the typically more than 6,000 hours of software development involved.

Models of Companies vs. Variations in Price, Quality, and Delivery

All the models presented above are suitable for companies specialized in on-demand software development. These companies are responsible for delivery and have the expertise for it.

However, to provide you with a broader understanding beyond this vendor model, let’s delve into the main profiles you may encounter in the market, varying by price, speed, and delivery quality.

Freelancers are affordable but may compromise on deadlines, quality, and security

We recommend hiring freelancers for startups or companies with an internal software management team. Freelance programmers are typically technically skilled professionals but may lack project management capabilities.

While they might be cost-effective compared to other hiring profiles, they may compromise on delivery quality and deadlines if the sole responsibility for project management falls on them. After all, you’ll be hiring a single professional.

In this same model, a software factory possesses a complete multidisciplinary team. We’ve seen situations where companies were in distress because the freelancer simply “disappeared,” and the company couldn’t enforce project delivery.

Agencies have average prices but may affect quality and speed

There are many excellent agencies in the market catering to startups and small digital solutions. However, when it comes to more robust solutions, where understanding data security, infrastructure, and DevOps (especially for systems) is crucial, agencies may fall short.

This is because their expertise lies in marketing, with software being an adjunct to their services rather than their core business, as is the case with companies specialized in bespoke software.

Therefore, hiring an agency for complex solutions may compromise scope understanding and fail to prepare the platform to withstand future maintenance, leading to significant headaches down the line when the solution is already on the market and in need of substantial improvements.

In summary, agencies are ideal for institutional websites, landing pages, blogs, and apps with functionalities similar to those of an institutional website, showcasing the company’s services and contact forms.

Software factories have medium/high prices but offer quality and adherence to deadlines

One of the most efficient solutions we’ve found for startups in the sales and growth phase or already established companies (both in software and other services) is hiring companies specialized in software development.

This is because they possess a high level of expertise in developing digital solutions of various kinds. Typically, the team for software factories comprises:

Business Analyst: Maps business rules with clients for the scope.

UX/UI Designer: Responsible for solution design and user experience.

Technical Lead: Estimates effort for demands and supports the development team in a senior capacity.

Software Architect: Responsible for application architecture, guiding the latest technologies and working closely with an infrastructure professional.

Infrastructure Analyst: Responsible for server layer, database, and application performance.

Project Manager: Ensures project progress, cost control, team management, and provides managerial reporting to the client.

Testing Analyst: Checks for bugs and rule errors in the solution developed by developers.

Developers: The team that executes the solution, with specialized profiles in various frameworks, including front-end, back-end, and infrastructure professionals.

Compared to freelancers and agencies, software factories stand out due to their multidisciplinary team of professionals, which enhances commitment to delivery and quality. However, their price may be higher, but it pays off in speed and quality.

Developing bespoke software is no small feat, especially in a fixed-scope scenario, which requires understanding your company’s current situation and structuring a solution that fits within the feasible investment.

Seeking out companies like Ubistart can facilitate understanding your scope and provide a total investment estimate tailored to your project needs.

So, if you’re seeking assistance with this challenge, we can be that company! Visit this link to learn more about how we operate and fill out the contact form at the bottom of the page. One of our sales consultants will then get in touch with you to discuss how we can support your software project.